Where Should You Invest Your Money In 2025?

As 2025 gains momentum, you may be thinking about your investment portfolio. Where will the opportunities lie in the new year?

As I’ve noted in the past, investors are once again faced with a landscape of opportunities and risks shaped by macroeconomic trends, evolving consumer behavior, and technological innovation—much of which has little to no historical precedent. While there are some solid stock options and interesting alternatives, looking farther afield for investment opportunities can be difficult.

If you’re unsure what to do with your money in the months ahead, here are some high-level insights into where some of the most important industries stand and how they may fare in the upcoming year.

Real Estate: Multifamily Housing is Meeting a Rising Need

The multifamily housing sector continues to show resilience, bolstered by strong demand for rental properties. “As the financial hurdles of buying a home persist and interest rates plateau, multifamily housing is emerging as the clear choice for many,” notes Chuck Bryant, Jr., COO of Roial Group, an investment firm focused on affordable multifamily housing. “This surge in rental demand, alongside strong economic conditions, highlight the enduring strength of multifamily investments.”

“The U.S. faces a critical shortage of affordable rental housing,” Bryant emphasizes, “with only 33 units available for every 100 extremely low-income households.” Other data backs up this statistic. According to the National Multifamily Housing Council (NMHC), the U.S. needs to build 4.3 million new apartments by 2035 to meet demand. This shortfall is driven by rising housing prices, a shift in consumer preferences toward renting, and demographic trends such as delayed homeownership among millennials and Gen Z. “This persistent gap,” says Bryant, “ensures steady demand, making affordable housing a stable and impactful investment opportunity for 2024 and beyond.”

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For those who wish to have exposure to multifamily real estate without managing their own properties, multifamily real estate investment trusts (REITs) could be a solution. For 2025, REITs are poised to benefit from a strong rental market, especially in high-demand urban and suburban areas. However, investors should stay up to date on other factors. Rising interest rates, for instance, could pose challenges for new developments, increasing borrowing costs and potentially slowing construction activity.

Technology: AI and Cloud Computing Still Hold Opportunity

Technology remains a cornerstone of modern portfolios, with artificial intelligence and cloud computing serving as key growth drivers. Gartner estimates that global spending on AI systems will explode over the next few years, growing at around 19.1% annually through 2027.

Companies like Nvidia, which dominates the AI chip market, and Microsoft, a leader in cloud services, are at the forefront of this transformation. They remain solid investment options as this initial AI investment run plays out in the coming years.

The semiconductor industry is another area to watch. The CHIPS and Science Act of 2022 has incentivized domestic semiconductor production, reducing reliance on foreign suppliers. This move is expected to bolster companies like Intel and Taiwan Semiconductor Manufacturing Company.

However, investors should remain cautious about valuations. The tech-heavy NASDAQ index has rebounded significantly in 2024, leading to concerns about overvaluation. Don’t overcommit here.

Energy: Traditional and Alternative Sources Will Require Balance

The energy sector presents a mixed outlook, with oil and gas facing headwinds and alternative energy gaining momentum. On the traditional side, the International Energy Agency (IEA) predicts that global oil demand will plateau by 2030, but short-term disruptions could drive prices higher in 2025. Geopolitical tensions and production cuts by OPEC+ have already led to price spikes in 2024, creating opportunities for companies like ExxonMobil and Chevron.

Alternative energy, however, is where growth potential truly lies. The Inflation Reduction Act (IRA) of 2022 allocated $369 billion toward clean energy projects, sparking a surge in investment. Solar power alone is expected to account for 30% of U.S. electricity generation by 2030, according to the Solar Energy Industries Association (SEIA).

“The ‘electrification of everything’ is more than just the most important macro tailwind for renewables,” says Glenn Jacobson, Managing Partner at Greenbelt Capital, a private equity leader in the energy sector. “It’s reshaping the entire energy landscape, as well as the computer, transportation, and industrial sectors. This shift represents a massive structural transformation, driving unprecedented demand for clean, reliable, and scalable energy solutions.”

Jacobson narrows his prediction to a combination of production and growth, saying, “I’m most bullish on solar and solar-plus-storage, both at the grid-scale and distributed levels, due to their unmatched economics. However, we’re set to see broad-based capacity growth across multiple energy sources. This expansion will go hand-in-hand with massive grid infrastructure investments as the market adjusts to a generational surge in both energy supply and electricity demand.”

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Solar has been a long-term investment option for years. Don’t expect it to lose its luster in 2025.

Retail: Changing Consumer Behavior Will Demand Investing Adaptation

The retail sector is navigating a complex environment characterized by shifting consumer preferences and economic pressures. E-commerce continues to expand, with online sales projected to grow by 8.6% in 2025, according to Oberlo.

Amazon (AMZN) and Shopify (SHOP) remain dominant players. However, niche platforms catering to specific demographics are also gaining traction.

Brick-and-mortar retail, on the other hand, is undergoing a transformation. Experiential retail, which focuses on creating unique in-store experiences, is gaining popularity. Companies like Lululemon (LULU) and RH (formerly Restoration Hardware) have embraced this trend and delivered strong financial performance.

However, like real estate interest rates, inflation poses a significant challenge for the retail sector. Rising costs for goods and services could dampen consumer spending, particularly in discretionary categories. Retailers with robust pricing power and strong brand loyalty are better equipped to navigate this environment.

Healthcare: Innovation Will Meet Demographic Tailwinds

The healthcare sector remains a front-line area of innovation. It continues to offer a compelling case for long-term investment driven by demographic trends and technological advancements. The aging global population is increasing the demand for healthcare services, while breakthroughs in biotechnology and medical devices are creating new opportunities.

Pharmaceutical companies like Pfizer (PFE) and Moderna (MRNA) continue to invest in vaccine development and gene therapies. Meanwhile, medical device companies such as Medtronic (MDT) and Boston Scientific (BSX) are innovating in areas like minimally invasive surgery and cardiovascular health.

Healthcare REITs, which focus on properties like senior living facilities and medical offices, also present a stable investment option. With a projected annual growth rate of 5.6% per year for healthcare expenditures through 2032, according to data shared by Beckers Hospital CFO Report, the sector is poised for sustained growth.

Putting Your Money in the Right Places in 2025

Investing may be an old concept, but it’s never looked like it does right now. Technology, economics, culture, politics, globalization, and countless other elements are influencing the investment landscape like never before. It’s important to consider where your money should go in 2025, and the real estate, tech, energy, retail, and healthcare sectors remain leading options for the months ahead.